Australia vs SNF: JUDGMENT
Case Information
- Court: Full Federal Court of Australia
- Case No: 2011 ATC 20-265
- Applicant: Commissioner of Taxation
- Defendant: SNF (Australia) Pty Ltd
- Judgment Date: 1 June 2011
The case Commissioner of Taxation v. SNF (Australia) Pty Ltd concerned a dispute over the application of the arm’s length principle in the context of transfer pricingTransfer pricing is a fundamental concept in international taxation that defines the pricing methods and rules applied to transactions between related entities within a multinational enterprise (MNE). In the context of tax regulations, it governs how prices for goods, services, or intangibles (such as intellectual property) are set when these items are exchanged between different branches, subsidiaries, or affiliates of... regulations under Australia’s Income TaxIncome Tax is a direct levy imposed by governments on the income generated by individuals, corporations, and other entities within a specific jurisdiction. It serves as a major source of revenue for governments and funds various public expenditures, such as infrastructure projects, healthcare, education, national security, and welfare programs. The tax is generally calculated as a percentage of the taxable...Tax AssessmentA tax assessment is a formal determination made by a tax authority to calculate the amount of tax an individual or entity owes. It is a comprehensive evaluation based on financial records, declared income, expenses, deductions, and any applicable tax laws or regulations. Tax assessments may arise from routine self-assessments by taxpayers, or they may be conducted by revenue authorities... Act 1936 (ITAA 1936). SNF, a subsidiary of the French-based multinational SNF Group, had imported chemicals—primarily polyacrylamides—from related foreign suppliers in France, the United States, and China. The Commissioner challenged the pricing of these imports, arguing that SNF Australia had paid its related suppliers more than an independent buyer would under comparable circumstances. Consequently, the Commissioner assessed additional income taxIncome Tax is a direct levy imposed by governments on the income generated by individuals, corporations, and other entities within a specific jurisdiction. It serves as a major source of revenue for governments and funds various public expenditures, such as infrastructure projects, healthcare, education, national security, and welfare programs. The tax is generally calculated as a percentage of the taxable... on SNF, claiming that the prices paid exceeded the arm’s length amounts required under Section 136AD(3) of the ITAA 1936.